sg-predicts-challenging-2010-for-policymakers-and-china

SG predicts challenging 2010 for policymakers and China

It is critical for policymakers to withdraw fiscal and monetary stimulus at the appropriate time, says Societe Generale, adding that the coming year could see China record a trade deficit.

The key risk facing China, the US and Europe, is that they may discontinue their financial stimulus strategies too early, Societe Generale economists said at an economic outlook briefing last week. If it is too soon, it may create another downturn. But if is too late, it may create long-term inflation and financial bubbles, said Stephen Gallagher, SG's chief economist for the US market.

Gradualism is the key for monetary policy tightening in China, emphasised Glenn Maguire, SG's chief economist for Asia. He foresees that over the course of 2010, the normalisation in policy in China is likely to occur in three stages -- informal guidance targeting the quality of loans with no...

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